The U.S. stock market has had three down weeks and Friday, January 21, 2005 was a down day. If Monday is a down day, we are setting up for a U.S. market rally. Stock market rallies often start on a Tuesday or on a Monday afternoon when the previous Friday has been particularly bad. Last Friday was indeed bad.

We expect a rally but not a long-term bull move. The U.S. bull market is in its later stages, but fear not, opportunities may be arising elsewhere.


Russia is doing what it can to undermine the interest of foreign investors by placing
ex-KGB operatives in positions of power at major firms. Expect more of the type of unattractive tactics used on Yukos, and expect less and less foreign capital to find its way to Russia as the world realizes their game.


India, which is famous for shooting itself in the foot, has done so again. The communists who are members of the governing coalition, are resisting the calls of others within the government to give the copyright and patent laws some teeth.

No patent protection means less drug discoveries and other technology innovation will go on in India. India will keep their outsourcing business, and it will grow, but their chance to be a center for original research financed by European and U.S. money will not develop. No one will pay for drug discovery or other original research to be done in a country where ones hard won patents and copyrights will be stolen. This will cut off a major source of economic growth that India could have enjoyed in coming years.


The speech indicates a continuation and acceleration of the programs that I have repeatedly mentioned in these memos for years. May I remind you of the recommended reading book, The Pentagon’s New Map by Barnett. Mr. Bush made a bold and far-reaching statement. Many have interpreted his words to mean that the U.S. will be fighting wars throughout the world for years to come, both the current wars and new wars.

As I have said before, the world is currently in a phase of creating new economic and political alliances. India recently agreed to buy Russian and Iranian oil. China and Russia are moving closer to supply contracts that will provide oil and minerals to China. China is signing resource agreements with Canadian and South American countries and trying to buy resource based companies.

Over the last few years, U.S. military moves in Afghanistan, Iraq and Syria have frightened many countries. The U.S. has frightened both those countries that are consumers of energy, and those nations who wish to have a hand on the levers of world power. China and Russia are two of these, but they are not the only two. I will discuss these very significant issues in more detail at a later time.